Several large US companies have decided to continue their activities in Russia despite the economic sanctions. The keywords #BoycottMcDonalds or #BoycottPepsi have appeared on social media.
From Apple to Levi’s jeans, many American multinationals have decided to suspend their operations in Russia. But some companies still prefer to stay in the country, despite the risks to their reputation. The keywords #BoycottMcDonalds or #BoycottPepsi have appeared on social media.
The head of the New York state pension fund sent letters to the bosses of these multinational corporations, as well as to the biscuit maker Mondelez, the cosmetics groups Estée Lauder and Coty, or even the brokerage house Bunge.
These companies “have to ask themselves if doing business in Russia is worth the risk during this extremely volatile period,” he justifies.
A team from Yale University maintains a list of companies that still have a significant presence in Russia. It highlights the role of the voluntary departure of 200 large groups from South Africa in the 1980s during the fall of apartheid.
Many US companies still in Russia remain silent, such as McDonald’s, Bunge, Mondelez, Estée Lauder, Kimberly-Clark or Coty, who did not respond to an AFP inquiry.
Legitimate Reasons
Starbucks claims that its about 130 cafes in Russia are owned by a Kuwaiti conglomerate and has pledged to donate any contribution of its business in the country to humanitarian efforts in Ukraine.
Yum! Brands also notes that nearly 1,000 KFC restaurants and 50 Pizza Huts are almost all independently owned and operated under a license or franchise. On Monday evening, the group also said it was suspending its investments in the country while “evaluating all additional options” and pledged to donate all profits from Russia to humanitarian operations. Some groups may have legitimate reasons to stay, say several ethicists and communications strategy experts interviewed by AFP.
“Right now, there are serious risks for Westerners in Russia, and these companies should do everything possible to repatriate these people,” said Richard Painter, a professor at the University of Minnesota and a former lawyer in charge of ethics at the White House.
Some companies may be hesitant because they think they can act as an intermediary between parties, or because they manufacture staple products such as pharmaceutical ingredients in the country, notes Tim Fort, professor of business ethics at Indiana University.
However, he adds, “it’s probably a good time to pick a side, and I don’t think it’s very difficult to do so” given Russia’s violations of human rights and conflict of laws.
“The Russians can survive without the Big Mac”
One company’s decision “doesn’t tip the balance, but there is an cumulative effect,” says Mr. Fort.
And such a well-known company as McDonald’s can have real influence in Russia in conditions when the official discourse minimizes the scale of the conflict, and the population has little access to other information channels.
“Russians will be able to survive without Big Macs, but mostly they will be wondering why McDonald’s is closing, wondering what is really happening,” the expert says.
According to Mr. Painter, companies should think about the message to be conveyed, namely that “Russia cannot start a war in Ukraine while participating in the global economy.”
He argues that in the face of tough economic sanctions imposed with broad consensus by Western governments, “this is the best way to deal with Russia”: the risk of using nuclear weapons in open armed conflict is too great.
It’s possible some groups are betting that criticism will tumble in the short term before falling off, suggests Brian Burkey, a business ethicist at the University of Pennsylvania. Other crises, such as the Israeli-Palestinian conflict, have already prompted calls for boycotts against certain companies, not necessarily with much effect.
However, support for such initiatives is not always unanimous, while “the vast majority of the population in European countries or in the United States agrees that what Russia is doing is clearly unacceptable,” Mr. Berkey said.
According to Mark Hass, a communications specialist at Arizona State University, the economic interests of companies that have so far chosen not to leave Russia “probably still outweigh the reputational risks.” McDonald’s, for example, receives 9% of its turnover and 3% of its operating income from the country.
But “if social media starts to identify you as a company willing to do business with an authoritarian rapist who is killing thousands of people in Ukraine, then the problem takes on a different dimension and could affect your business far beyond Russia,” Hass says.